Keeping your money safe

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Like many people, Debra Boyle looks forward to the day she is able to retire and has kept track of her money tied in investments and in her bank accounts.

However, the economic events of late September and early October have caused the Spruce resident to put her finances under the microscope and be concerned with how safe her money really is.

Within recent weeks, she's been in touch with some advisors and is prepared to make a decision about her investments if she feels the market gets too bad.

"I'm just keeping my eyes peeled," she said. "I've never checked it like I do now. I check it every day."

Peggy Stanton, general manager at Thunder Bay Area Credit Union, said the credit union has received numerous questions from concerned members about the well being of their accounts and money. Staff have reassured members their money is safe.

"I know a lot of people these days are concerned about their money being secure," she said. "A lot of the things commentators are saying are frightening people."

Craig Kus, president and CEO of the Bank of Alpena, said the bank has also received some calls from its customers. The bank is well capitalized and has a strong board of directors, he said.

Individuals should be sure all of their capital is backed and insured by federal government insurance programs, said Jared Burke, AmeriPrise Financial Services, Inc. associate financial advisor.

Banks are insured through the Federal Deposit Insurance Corp. The recent bailout legislation passed by Congress will raise the FDIC limit from $100,000 to $250,000 for one year.

"There are some pretty strict rules and regulations we have to follow in order to maintain that relationship with the FDIC and to provide insurance," Kus said. "They periodically visit the banks and test the bank in regards to those, whether we're following those rules and regulations so we can continue that relationship. I would suggest that they find an institution that provides that type of insurance."

If someone's total cash deposits are more than $100,000, they should utilize as many institutions as necessary to ensure all accounts are insured, Burke said.

"One way to keep more than $100,000 in a single account is by purchasing brokered CDs in a brokerage account. A brokerage CD is a certificate of deposit purchased through your brokerage firm that allows you to spread your money across several financial institutions capturing full FDIC protection at each institution."

Kus said people are advised to be cautious of banks which offer abnormally higher deposit rates than others.

"They're doing that because they need the deposits, something's going on there," he said. "Don't be looking for the highest rate of return right now on your money. I'd be looking for safety before I'd be looking to take risk."

It can be advantageous to do business with a local bank because people can more easily know who they're dealing with. When choosing a bank, people can ask the institution about items including who owns it and what kind of stockholders it has, Kus said.

Credit unions are insured through the National Credit Union Share Insurance Fund, which is backed by the full faith and credit of the federal government.

"It does the same thing the same for credit unions that the FDIC does," Stanton said.

Stanton said people can look at criteria including how long the institution has been in business. Other safety nets for people's money are federally mandated and any reputable institution would have those in place, she added.

Credit unions are examined on a regular basis, like banks, and their examiners are big on asset liability management, Stanton said.

On the investment side, it can be helpful to look at reviews of a company's financial from third party rating services such as Fitch Ratings and A.M. Best Co. People are recommended to look for businesses with AAA, AA or A ratings. These rating services are reviewing a company's ability to take care of its liabilities, said Russ Courtney, owner of Courtney Retirement & Investment Services.

People should use this time to take a look at their registration and account values. It's important to understand the parameters of what companies and the government guarantee, said Lisa LaCross-Courtney, Courtney retirement associate.

"This is really the environment that they really need to go back to their financial advisors to really talk about their particular situation so they don't do something that is really going to harm them long term," she said.

Deborah Smith of Ossineke said she's been in touch with her financial advisor because some of her investments have taken hits in the market recently. She will likely contact him again soon.

"We watch it month to month and we realize there's fluctuations in the market. If the market goes up we might sell," she said.

Chris Keller of Alpena said he currently is not invested in any mutual funds but was in the past. He's been more concerned with investing than his state of his bank accounts.

"It's something I've wanted to start back up, but with everything that's gone on I'm kind of reluctant," he said.

Patty Ramus can be reached via e-mail at pramus@thealpenanews.com or by phone at 358-5687.